A Restaurant for the 99 Percent — Of Chefs

Tender Greens in San Diego
Source: Tender Greens
Tender Greens in San Diego

Although they all had a background working in Michelin-starred restaurants, what Erik Oberholtzer, Matt Lyman and David Dressler really craved was “farmer’s market food at a price we could afford,” says Oberholtzer.

The three met while working at Shutters on the Beach in Santa Monica, Calif., and talked about how there were very few places around Los Angeles where they enjoyed going to eat on their days off from work.

It took two years of fundraising and conceptualizing, but in 2006, Tender Greens was born with the goal to support locally sourced food and small farmers.

By offering healthy dishes made in-house using slow-food techniques, and charging less than $11 per dish, Tender Greens prides itself in its chef-driven expansion model and local farmer partnerships.

With seven restaurants in California and six executive chefs, the sustainable, mid-sized business is on course to grow to 30 locations in the next 10 years. The owners are still hands-on with every aspect of the restaurants and visit farmers, partners, suppliers, and well as scout new locations.

Erik, Matt and David of Tender Greens
Source: Tender Greens
Erik, Matt and David of Tender Greens

The three men are even turning their chefs into entrepreneurs, by mentoring and helping them grow their own businesses.

Oberholtzer talks about how he, Lyman and Dressler turned their passion for cooking into a thriving business, and how they are expanding the Tender Greens brand without franchising.

Where did the idea come from?

We saw a hole between the high-end, high-quality restaurants and the low-end, low-quality chains and independents we could afford. There wasn’t a model out there that inspired us in particular, and we saw a gap in the market. Tender Greens is our answer to this need in the middle.

Where did the funding first come from?

Friends and family. We were all pretty broke when we started. But we raised about $900,000, which was [we thought] enough to open three stores, but construction costs were much more than we had anticipated. Later on, Scarborough Farms invested in Tender Greens through product exchange. They provide the restaurants with fresh-picked produce daily in reusable eco-friendly containers, in exchange for shares and equity in the company [which is privately owned]. We wanted to partner up with them, and it was a unique deal. For us, it’s great knowing that we’re going to have that supply line.

Tender Greens in Culver City
Source: Tender Greens
Tender Greens in Culver City

Who was your first customer?

When we opened, [the first Tender Greens restaurant in Culver City, Calif.] we had a line out the door the first day. Many of them are still loyal customers.

You have seven restaurants under your belt. Why don’t you go the franchise route instead of expanding on your own?

It was an option. In the context of the Tender Greens brand and what it takes to run a company and tracking other start-ups, we saw how other restaurants expanded rapidly and lost control of their brand. Sometimes brands franchise just to grow, and there is definitely a danger in Tender Greens losing its brand mojo, control and message.

When we open a new location, we reach out to our network for chef friends and acquaintances to find an executive who would be a fit for the neighborhood they’re opening in. With each new location, an executive chef has the freedom to express their culinary creativity in special projects and daily specials. They offer fine-dining quality and technique for casual dining prices. We want to protect the brand quality and culture, so we were hesitant to hand it off to anyone on the outside.

When did you know the company would be a success?

We were at that stage in our lives where we were able to take risks, and if we failed we would recover. We were unique during June 2006m and were comfortable that people would respond. By the third week, we knew we were onto something. We were busy day and night.

What’s next?

Three more stores this year, including ones in La Jolla, Calif., and Orange County, Calif. We plan to open four to five annually after that. We are also looking into other states. New York City is a place we’ve been talking about for some time.

Email us at SmallBiz@cnbc.com and follow us on Twitter@SmallBizCNBC.

Follow Jessica Naziri on Twitter @jessicanaziri